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Search giant Google has been accused of avoiding UK tax by routing most of its earnings through Ireland.

This means it saves about £100m a year by paying Irish corporation tax at 12.5 per cent rather than the 28 per cent it would face in the UK.

British advertisers send their money to Google's Irish subsidiary, an arrangment described as unfair and unacceptable.

This means that even though Google UK turned over £1.25bn in the UK it paid only £600,000 in UK corporation tax - 90 per cent of its earnings were channeled through Ireland.

Richard Murphy, who did the research for the Sunday Times, called on Her Majesty's Revenue and Customs to tax Google on its UK turnover as if it were running a UK branch.

A Google spokesman said: "Google complies fully with the tax requirements in all the countries in which we operate. In the UK and elsewhere we make a very substantial contribution to local and national taxation. In addition, we provide employment for hundreds of people in the UK and many more across Europe."

Google has close links with the Tory party - Eric Schmidt sits on their economic recovery committee and Google's chief spin doctor is ex-Tory spinner Rachel Whetstone.

Several companies have faced similar accusations including Tesco and of course the owner of the Sunday Times, News International. ®

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